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Mortgage Rates Fall To Lowest They've Been In Months

Heather said: "Freddie Mac reports mortgage rates have fallen to the lowest they've been in months. [QUOTE]Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.45 percent. That was down from 6.52 percent last week and was the lowest level since the week of May 31, when rates stood at 6.42 percent.[/QUOTE] The big drop in 30-year mortgage rates followed the Aug. 17 decision by the Federal Reserve to slice its discount rate, the interest it charges to make direct loans to banks. That move was designed to calm recent turmoil on Wall Street about a spreading credit crunch. Do you think this will be enough to stimulate the housing industry?"

AlfredSokol said: "Nope. There is still way too much unsold inventory."

Aligator said: "What he said. People will buy in a while, but not now. [I]Everyone[/I] is aware that real estate prices are falling. [I]Everyone![/I] When the "sorry state of real estate" no longer makes headlines people will forget about it and buy something."

lil dickie said: "I wonder how efficient these home builder companies are at getting rid of unsold inventory? Im sure some of them have had a boom mentality for a long while and dont know what to do now that a crisis has set in."

lil dickie said: "Congrats. Id sell and take the profit if I were you."

Aligator said: "[QUOTE=lil dickie]Congrats. Id sell and take the profit if I were you.[/QUOTE] Heh, heh....Ya know, there just ain't that many markets where a guy can make 10% (before a 6% commission to a realtor) in 2 1/2 years and [U]still[/U] feel like he's set the world on fire!:laugh: But I understand his elation. I really do.:laugh:"

lil dickie said: "The Fed has lowered the federal funds rate 50 basis points. Can we expect some cheap mortgages?"

LongArm said: "[QUOTE=lil dickie]The Fed has lowered the federal funds rate 50 basis points. Can we expect some cheap mortgages?[/QUOTE] Not necessarily. Mortgage rates are generally tied to treasury yields, not the fed funds rate. Shorter-term ARMs are more likely to be influenced by the fed funds rate because they're tied to shorter-term treasuries (which are more directly influenced by the fed funds rate). Longer-term mortgages are tied to longer-term treasuries which [I]tend[/I] to [I]sort of[/I] move with shorter-term treasuries, but not in lockstep. If any of that makes any sense. :whacky011:"

AlfredSokol said: "I doubt the consumer will be seeing much relief from his woes because of this rate cut."

FirefighterB said: "Agreed. I was trying to remember if existing ARM interest rates go DOWN if interest ratest go down. It's been awhile since I had my RE classes, but IIRC they can go up and are usually capped at the "second" (3/x or 5/x) number as a max increase per year, but if interest rates dropped would the existing ARMs reset as well? Also, I can't remember the correlation between interest increases and ARM increases. Say rates go up 0.5 a point, does the ARM go up the same amount, or can they increase it at an arbitrary amount up to the (usually) 1% per year cap?"